Realistic Profit Margin

I want to take a poll to see what everyone feels is a good profit margin to meet certain criteria.

  1. To keep business a float.
  2. To grow the business.
  3. To go through the slow months, lets face it, there are going to be months where the work is very little.
  4. To cover all the necessary overhead, including proper workman’s comp, general liability, taxes, advertising, and other overhead like rent, equipment up keep, and office salary.

My family has been roofing since the '50s. I roofed every summer through high school as a laborer. I am now back helping with the business side of things and am discovering that the old way of doing business is not sustainable in the long term. Too much risk compared to reward. I know a lot of roofers that don’t have proper insurance which to me only seems like a disaster waiting to happen. I know some that work on a shoe string budget and get by job to job, also a disaster waiting to happen.

A lot goes in to roofing and a lot of things can go wrong. Having a good profit margin to shoot for is the only way I can think of to really cover your ass when something happens, which it will.

My opinion is roughly 45-55% profit is adequate in order to get through the rough times and grow your business. What are your thoughts?

So you are saying that if your over all cost is 10 grand
You are charging 20 grand?.
You are a way better salesman than me!!.

I think your gross profit (total price minus labor and materials) needs to be 38 to 45%. That is assuming you use commission sales reps. A mom and pop operation not paying commissions would obviously be less. Your net is obviously going to depend then on your overhead.

And on another note, what do you think is a fair commission @Authentic_Dad? What is a common industry standard?

Many use 10/50/50 for commissions.

If you are not making at least 36% profit then you are looking for trouble.

Hey @blackwaterfrog are you meaning 36% gross profit or net?

It’s a 2 year old post so you may not hear back from him. I can tell you if you are making 36% net profit please let me know where you’re based at. I’m moving there tomorrow!

@Tileman ROFL … agreed. 36% net would mean we’re dealing in more than just shingles and siding I think :slight_smile:

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